Tom Lee Crypto Rally Signals Fed Easing and CLARITY Act Support
Fundstrat's Tom Lee believes crypto's recent rally signals upcoming changes in Federal Reserve policy and political support for the CLARITY Act. Speaking on CNBC, Lee argued that rising digital assets and tech stocks suggest easier monetary conditions ahead, despite earlier expectations of further rate hikes. He noted that markets had priced in three rate hikes, including a 75% chance of an October increase, but last week's softer jobs report shifted that outlook.
Lee also took a contrarian stance on the CLARITY Act, predicting that Democrats will back the bill after the midterms. Although the crypto market structure bill failed a Senate procedural vote 49 to 50 on September 15, Lee expects this setback to be temporary. He views the midterms as a 'clearing event' that will likely boost risk assets regardless of the outcome.
Looking ahead, Lee anticipates softer inflation readings over the next six months, which would allow the Fed to ease its hawkish stance. He also sees potential for the S&P 500 to reach up to 8,400, citing accelerating earnings, cheaper stock valuations, and high oil prices supporting the US economy. However, he cautioned that a market pullback could occur between mid-October and the midterms.